If you sell software or digital products worldwide and want someone else to be legally responsible for sales tax and VAT, Paddle is the most established merchant of record for SaaS at 5 percent plus 50 cents per transaction, all-in. Lemon Squeezy, owned by Stripe, has the same headline fee but adds surcharges for international, PayPal and subscription payments, so it suits smaller digital product sellers. Stripe Managed Payments, generally available since April 2026, adds 3.5 percent to standard Stripe fees and lets you use a merchant of record only for some markets. Once revenue passes a few million dollars, many companies become their own merchant and use Stripe Tax, Anrok or Quaderno to calculate and file tax instead.
Paddle has acted as merchant of record for software companies since 2012. It is the legal seller to your customers, so it calculates, collects, files and remits sales tax, VAT and GST, and it also handles payments, subscriptions, fraud, chargebacks, invoicing and buyer support. The public price is 5 percent plus 50 cents per checkout transaction, with no monthly fees, and custom pricing is available for high volume or low-price transactions. G2 lists 239 reviews averaging 4.5. One thing to check: Paddle Billing and the older Paddle Classic use different APIs, so confirm which one documentation and integrations refer to.
Pricing: Paddle's public pay-as-you-go rate is 5% plus 50¢ per Checkout transaction, with no monthly, migration, or hidden fees. The fee covers payments, tax compliance, fraud, chargebacks, billing, and buyer support. High-volume or low-value transactions can receive custom pricing.
Combines merchant-of-record tax responsibility with payments, billing, fraud, and chargeback handling.
Publishes a straightforward pay-as-you-go rate with no monthly or migration fee.
Provides APIs, webhooks, checkout components, sandbox testing, and four official server-side SDKs.
The 5% plus 50¢ blended fee can be expensive for high-volume or low-value transactions.
Paddle Billing and legacy Paddle Classic use different APIs, IDs, webhooks, and concepts.
Desktop SDKs are not available in the official SDK catalog.
Merchant-of-record payments, subscriptions, and global tax handling for software companies and digital creators.
Lemon Squeezy, acquired by Stripe in 2024 and still sold separately, is popular with indie developers and creators selling software licenses, courses and digital downloads. It has a storefront, license keys, email marketing and affiliate tools built in, and reports more than 15,000 merchants. The standard fee is 5 percent plus 50 cents, but extra charges apply: 1.5 percent for international transactions, 1.5 percent for PayPal, 0.5 percent for subscriptions, and 3 to 5 percent for affiliate and cart recovery sales. A US subscription sold to a European customer therefore costs about 7 percent plus 50 cents.
Pricing: The standard platform fee is $0.50 plus 5% of total order value. Additional charges include 1.5% for international transactions, 1.5% for PayPal transactions, and 0.5% for subscription payments; affiliate referrals add 3% and abandoned-cart recovery adds 5%. Large-scale businesses, sellers of products below $10, and high-volume businesses can request custom pricing.
Combines merchant-of-record tax administration with payments, subscriptions, and digital delivery.
Provides API and webhook tooling for synchronizing orders, subscriptions, and license events.
Supports international checkout, multiple currencies, and more than 20 payment methods.
The $0.50 plus 5% standard platform fee can be expensive for high-volume or low-priced products.
International, PayPal, subscription, affiliate, and abandoned-cart transactions can add surcharges.
Merchant-of-record checkout gives sellers less direct control than a standalone processor.
Stripe Tax calculates and collects sales tax, VAT and GST in more than 100 countries for businesses that remain the merchant of record themselves. Tax Basic charges 0.5 percent per transaction where you are registered, and Tax Complete adds registration and filing on an annual contract. You keep full control of checkout and customer relationships, and your total fee is far lower than a merchant of record. The trade-off is that you carry the liability: you must register, file and handle audits. For companies that want Stripe to be the merchant instead, Stripe now offers Managed Payments, covered below.
Pricing: Tax Basic charges 0.5% per transaction where the business is registered to collect tax on Billing, Checkout, Invoicing and Payment Links. Tax API transactions cost $0.50 each, including 10 calculation API calls, then $0.05 per additional call. Tax Complete is priced per month on a one-year contract, with plan limits and pricing presented through Stripe’s plan flow rather than a public dollar amount.
Tax calculation is embedded in Stripe payment and billing products.
Coverage spans 100+ countries and 700+ product and service types.
Tax Complete combines registration workflows with filing options.
Tax Basic does not include registration or filing automation.
Direct Stripe filing coverage is limited to the US and selected Ireland and Canada registrations.
Tax Complete pricing and plan limits require a sales or Dashboard workflow.
4. Best tax engine for SaaS that outgrow a merchant of record
Anrok
Automated sales tax, VAT, and GST compliance for modern, high-growth companies selling across jurisdictions.
Anrok was built for SaaS and digital businesses and handles calculation, nexus monitoring, registration and filing across more than 150 countries and 11,000 US jurisdictions. Starter costs $100 per market per month and includes the full platform, with no separate fees for calculation or filing. It has more than 40 native integrations with billing, payment and ERP systems, including Stripe. It is a common destination for companies leaving Paddle or Lemon Squeezy once tax fees become a large line item.
Pricing: Starter is $100 per market per month and includes the full core platform, with no separate calculation, filing, or core-feature charges. Custom pricing scales with transaction volume and is quoted by Anrok. Starter sellers with high transaction volumes may incur disclosed third-party fees.
Starter publishes a clear $100-per-market monthly price and includes core compliance workflows.
Coverage extends to 150+ countries and 11,000+ US taxing jurisdictions, including home-rule cities.
Native connections to billing, ERP, ecommerce, and HRIS systems reduce manual exports.
Starter high-volume sellers may face additional third-party fees.
Registration setup can still require customer permissions and manual coordination.
G2 reviewers report occasional onboarding, jurisdiction-setup, and support delays.
Automated sales tax, VAT and GST compliance for SaaS, e-commerce and digital businesses selling worldwide.
Quaderno, owned by Visma since 2023, calculates tax and issues compliant invoices and receipts in more than 150 countries and all US sales tax states, with plans from $24 a month by transaction volume. It works with Stripe, PayPal, Shopify, WooCommerce and Paddle. Registration and filing are separate quoted services. It suits small software and digital product sellers who want to stay the merchant at the lowest monthly cost.
Pricing: The current public pricing page lists flat monthly plans by transaction volume: Hobby $24, Startup $41, Business $83 and Growth $124. Annual billing is available at savings equivalent to two months free; Enterprise is quote-based. Registration and filing are separate services with jurisdiction-specific quotes, and support documentation describes a $0.25 per extra transaction option and automatic tier upgrades after repeated overages.
Covers calculation across more than 150 countries and regions, with all US sales-tax states included.
Connects multiple sales channels and payment processors so reports can combine otherwise fragmented transaction data.
Public plans are straightforward and include unlimited users, jurisdictions and integrations above Hobby.
Tax calculation coverage does not mean Quaderno automatically registers or files in every supported jurisdiction.
Registration and filing require a separate quote and are limited to the jurisdictions and services Quaderno can manage.
The Hobby plan limits users, jurisdictions and integrations to one each.
When a software company in Austin sells a $50 monthly subscription to a customer in Germany, someone has to charge German VAT, issue a compliant invoice, file a VAT return and pay the tax. The same applies to customers in the UK, Australia, Japan, Canada and more than 40 US states that tax software. Each has its own registration thresholds, rates, invoice rules and filing calendar.
A merchant of record removes that work by becoming the seller. The customer buys from Paddle, Lemon Squeezy or Stripe's Link entity, not from you. The merchant of record collects the money, charges the right tax, files the returns, handles chargebacks and refund requests, and pays you the net amount. You become, in tax terms, a supplier to one company.
That is why merchants of record are so popular with small software companies. A two-person startup can sell in 100 countries on day one without a single tax registration.
The fee math
The convenience is not free. Compare what you keep on a $100 sale:
Setup
Approximate fee on $100
Who is liable for tax
Paddle
$5.50
Paddle
Lemon Squeezy, domestic one-time sale
$5.50
Lemon Squeezy
Lemon Squeezy, international subscription
~$7.50
Lemon Squeezy
Stripe Managed Payments (US card)
~$6.70
Stripe (Link)
Stripe payments plus Stripe Tax Basic
~$3.70
You
Stripe payments plus Anrok or Quaderno
~$3.20 plus monthly fee
You
At $1 million in annual revenue, the gap between a merchant of record and processing directly is roughly $20,000 to $25,000 a year. That will not pay for a tax team, so most companies stay with a merchant of record at that size. At $10 million, the gap is $200,000 or more, which pays for a tax engine, filing service and an accountant several times over.
How we chose these five
We reviewed the merchant of record and indirect tax platforms in our tax directory. We focused on providers that suit SaaS and digital products, publish prices, and are widely used. We weighted total cost, coverage, billing features, developer experience and how easy it is to move away later. Prices are as of October 2026.
Other merchants of record worth comparing: FastSpring, which has served software and games companies for many years; Polar, an open source billing and merchant of record platform aimed at developers; and Stripe Managed Payments, which does not yet have its own profile in our directory and is covered below.
Stripe Managed Payments
Stripe launched its own merchant of record service and made it generally available on April 22, 2026, to businesses in 39 countries. Stripe's Link entity becomes the seller and takes responsibility for indirect tax in more than 80 countries, plus fraud, disputes and transaction-level support. It costs 3.5 percent on top of standard Stripe processing.
Its distinctive feature is that you can turn it on per transaction. A US company can process domestic sales directly through Stripe, with its own state registrations, and route international sales through Managed Payments. That hybrid is not possible with Paddle or Lemon Squeezy, which take over the whole checkout.
Limits to note: it supports only digital products such as software, SaaS, digital media and online courses, not professional services or physical goods, and it does not support Stripe Connect platforms.
Which option fits which company
Solo developer or small team selling a digital product. Lemon Squeezy for the built-in storefront and marketing tools, or Paddle if you sell B2B subscriptions.
SaaS company from launch to roughly $5 million in revenue. Paddle, or Stripe Managed Payments if you already use Stripe Billing and want to keep it.
SaaS company above $5 million, or selling mainly to enterprises. Become your own merchant, process through Stripe or another processor, and use Anrok, Stripe Tax or Avalara for calculation and filing. Enterprise customers often prefer contracting and being invoiced directly by you.
Company with mostly domestic sales and a growing international share. Stripe Managed Payments for international markets, and Stripe Tax or Anrok for your home market.
Switching away from a merchant of record
Moving off Paddle or Lemon Squeezy takes planning:
Register for tax first. Check where you exceed thresholds, usually US states with economic nexus, the EU through the OSS scheme, the UK, Canada and Australia. See our sales tax nexus guide and EU VAT guide.
Migrate subscriptions. Payment details often cannot be exported from a merchant of record in a usable form. Ask about card data migration before you commit, or plan for customers to re-enter cards at renewal.
Update contracts and invoices. Your company becomes the seller, so terms, invoices and refund policy change.
Run both in parallel. New customers on the new setup, existing ones migrated in batches.
A merchant of record is the company legally selling the product to the customer. It appears on the card statement and invoice, collects payment, and is responsible for sales tax, VAT and GST, refunds, chargebacks and consumer law. When you use Paddle or Lemon Squeezy, they buy your product and resell it to the customer, taking those obligations off you.
How much does a merchant of record cost?
Paddle charges 5 percent plus 50 cents per transaction. Lemon Squeezy charges 5 percent plus 50 cents with surcharges of 0.5 to 1.5 percent for subscriptions, international and PayPal payments. Stripe Managed Payments adds 3.5 percent to standard Stripe processing, which is 2.9 percent plus 30 cents for domestic US cards, for about 6.4 percent plus 30 cents.
Merchant of record vs payment processor: what is the difference?
A payment processor such as Stripe or Braintree moves money for you, but you remain the seller and are responsible for tax registrations, filings and consumer law in each country. A merchant of record takes on those responsibilities in exchange for a higher fee.
When should I stop using a merchant of record?
Common triggers are revenue above a few million dollars, when the fee difference pays for in-house tax tools and an accountant; the need for full control of checkout and customer data; enterprise customers who want to contract with you directly; or selling services and physical goods that merchants of record do not support.
Do merchants of record handle US sales tax?
Yes. As the seller, Paddle, Lemon Squeezy and Stripe Managed Payments collect and remit US sales tax where required. You do not need your own state registrations for sales made through them, though you may still owe income tax and franchise tax.
Can a merchant of record sell services?
Generally not. Merchants of record support software, SaaS and digital goods. Stripe's documentation, for example, excludes physical goods, professional services such as consulting or development, and live events from Managed Payments.
Prices and ratings come from each vendor's public pricing pages and review sites as of October 22, 2026. Vendors change pricing often, so confirm with a quote. Nothing here is tax or legal advice.
